“A judicial state is one where the lender/beneficiary has to file a lawsuit to foreclose,” said Bruce Neas, of Columbia Legal Services, in Olympia, Washington. In some non-judicial states, such as Colorado, a court order is needed to allow a sale, according to the National Consumer Law Center’s survey of foreclosure laws.
In some non-judicial states, including Washington, a bank hires a trustee to handle the foreclosure and courts don’t review documents.
‘Much More Vulnerable’
“It puts the borrower in a much more vulnerable position,” said Christopher Peterson, a University of Utah law professor who specializes in commercial and contract law. In the 23 judicial states, homeowners can bring complaints to the judge overseeing the foreclosure. “The only recourse in non-judicial states is to file a lawsuit,” Peterson said.
All 50 U.S. states are investigating whether banks and loan servicers used false documents and signatures to justify hundreds of thousands of foreclosures. Attorneys general in non- judicial states, including Arizona, Texas and Washington, are conducting independent probes of mortgage foreclosure practices and examining the documents used to secure foreclosures.
“Washington’s foreclosure process frequently includes inaccurate documents, conflicts of interest, faulty chains of title and failures to provide the disclosures and conduct mediations required by law,” state Attorney General Rob McKenna said at a press conference on Oct. 13.